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The Tokyo Stock Exchange, Asiaâs largest exchange, today suffered its third system problem this year as a glitch left investment banks and brokers unable to trade Japanese futures and bonds for more than four hours.

The fault came fewer than six months after the exchange fined its top management for a similar system problem that forced the exchange to suspend trading on a futures contract for two days in early February.

The TSE said today trading of Japanese derivatives, including index futures and options, single stock options and Japanese government bonds, was suspended until 13:45 local time (04:45 GMT) after trading was halted at 09:21 (00:21 GMT) because the order book was not available on the trading system.

The glitch was linked to a systems upgrade conducted over the weekend and concluded yesterday, a public holiday in Japan.

It is the third system issue at the exchange this year. The exchange halted trading on Friday, February 8, citing a malfunction on the exchange’s derivatives transaction processing system. Trading did not resume until Tuesday, February 12, an outage that led the exchange to fine senior officers, including its chairman and chief executive, 10% of their monthly wages.

A month later the exchange was again left red-faced as it was forced to suspend shares in two companies after a computing problem prevented orders in the stocks from being processed.

The exchange is nearing the end of a ¥3bn (€212.3m) IT upgrade, culminating in the delivery of a new trading system in the second half of next year, a move set to make the largest Asian equities more competitive with international rivals such as the London Stock Exchange, NYSE Euronext and Nasdaq OMX.

The 2009 delivery will be the culmination of a program launched by the exchange two-and-a-half years ago following the Mizuho Securities trading debacle in December 2005 when the Japanese broker blamed the exchange’s systems for a $344m (€272m) loss.

TSE’s upgrade is the latest move by a large international exchange to court the growing demand for high capacity, fast trading platforms as fund managers, hedge funds and banks increase their use of algorithmic trading and other "low-touch" trading strategies.

The London Stock Exchange, which a year ago completed a £40m (€59m), four-year IT upgrade, plans to further upgrade this technology in October, cutting trading speed to 3 milliseconds.

A spokesman for the Japanese exchange said: “Computer systems are key to sustaining growth for modern stock exchanges and this is an important step to make us more competitive in international equity trading.”